Business Owners Toolbox Blog Discussions and articles to help the small business owner solve the challenges they face as they grow their business.

April 9, 2014

Poverty Gulch

How to stay out of POVERTY GULCH

“I’m so busy on my big lucrative project that I have no time to market!” Then the project comes to an end. Now you have plenty of time to market. But you’ve been out of the flow so long that it takes awhile to fill your pipeline. You’re in Poverty Gulch.

boom and bust cycleYou have just gone from having a big project, where you are very busy, but fat and happy, to having no work at all. Since you were so busy–and making so much money–you did no marketing. When the project ends, your workload falls way off. You have to hustle for work until you get another big project. Then you once again forget about marketing.

This is a very common occurrence for entrepreneurs. It’s called the “boom and bust” cycle. What can you do about this? How can you keep a level of business development going even when you are focused on a large project, so that when it ends, it doesn’t take you so long to get back up to speed?

It is a matter of attitude and setting boundaries with your client. Are you the head of a business? If so, you must allocate time for all aspects of running your business, including marketing.

The biggest barrier to this is not the demands of your client. It’s your own preference to just keep working rather than face the uncertainty of drumming up more business. Admit that to yourself.

no povertyMany entrepreneurs much prefer doing client work than marketing for new work. For them, having one big lucrative client is the ideal–especially if the money is good. It’s a risky strategy, though.

Two options:

1. Set a limit: No single client absorb be more than 15%, or 30%, or 50%, of your work time. Choose your own number.

2. Make clear to your big client what your maximum weekly or monthly billable hours for them will be. Then stick to it. You don’t want to be their contract employee.



January 30, 2013

Presentations for the Non-Presenter

I invited Elaine Love to do this guest  post for my blog.

41% of 5000 people in a 2011 management association survey listed their #1 fear as public speaking.  In the same survey, 19% listed their #1 fear as death.  Even though more people fear public speaking than death, I guarantee, the experience will not be fatal.

You have been asked to deliver the opening remarks for your professional association’s annual meeting.  It was easy when you were sitting around a table with the five people in your management team.  Standing on stage speaking to three hundred people is totally different.  You know your subject, but you have never thought of yourself as a public speaker.


Facts First

How long have you been asked to speak?  Once you know the time parameters, you can organize your thoughts.  If you have ten minutes, break it down into an opening, body and conclusion.

Opening:  On a ten minute presentation, one minute for an opening is ideal.

Body:  The body of the presentation is seven minutes.

Conclusion:  Wrap up your remarks in two minutes.

Granted, this is a simplification.  I can hear your brains saying, “Easy for you to do.”  You will amaze yourself how well you will do.  1 + 7 + 2 = 10 minutes and you are off the stage.



Open with something interesting.  Your audience decides in the first seven seconds if they like you and in the first thirty seconds if they want to hear what you have to say.  Make your first seconds count.

Boring speakers open with the unpleasant pleasantries of “It’s nice to be here” “Thank you for coming” “Glad to see you.”  Don’t waste your precious opening seconds.  Boring openings send the audience scurrying to check their smartphone for messages.

Open with a shocking statistic, a quotation, something humorous or a quick story.  The opening is designed to create attention and interest. When you open with something interesting, you create the impression that the meeting will not be a waste of their time.

Just as a beautiful woman catches the eye, captivates the attention and inspires the interest to want to know more, so does your opening.


The main part of your message includes the information you want to convey.  The easiest way to think about the body is by answering the question, “What do you want them to think, feel or do?”

If seven minutes feels like a long time, consider that the average cell phone call is three minutes and 15 seconds.  Conference phone calls run slightly longer.  Mentally think of yourself as making one video conference phone call.

The easiest way to organize the main portion of your message is to state your central point and back it with statistics, a story or by highlighting a benefit to them.

Tie your message in to the purpose of the meeting.  Make a point and support it.  The more they know the value they receive by following your idea, the more buy-in you will receive.

Seven minutes gives you enough time to thoroughly cover one point.  The temptation is to hint at several topics and not really cover any of them.  If you attempt to cover too many topics in a short period of time the audience becomes confused or overwhelmed.  As you know so well, the confused or overwhelmed mind does nothing.


Summarize your main points and leave them with your “walk away message.”  In a sales presentation you give a call to action.  Here your call to action is what you want them to think, feel or do after you speak.

Bring your remarks full circle by summarizing your main point, your call to action and tying in your opening.

Just like that beautiful woman leaves you wanting more, you are leaving your audience wanting to hear more from you.

In a Nutshell

Have confidence in yourself.  You are probably the only person who knows that you are nervous.  Public speaking will not be fatal.

Give an interesting opening, one well supported point, and a conclusion with a “walk away message.”

Elaine Love writes for, Small Business Examiner and  Her expertise is in small business, marketing, mindset for business and speaking coaching.  Her credentials include Masters Degrees in Communication, 35 years of entrepreneurial awards including “International Innovator of the Year,” World Class Speaking Coach, and author of 3 books.  Contact Elaine on Google+ at +Elaine. 

A Presentations Skills Quiz, Effective Openings and Panic to Power presentation guides are an email away.  Send Elaine your contact information and one speaking challenge you are facing.  You will receive the guide and

August 13, 2012

Using a Business Coach or Life Coach

Question from Amanda Carter, on LinkedIn. Have you ever sought the assistance of a Business or Life Coach?

My answer. I’m in the coaching and consulting business, but even so, I have used a variety of coaches. For example:

Business owner round tables. First, my business is leading groups of 10 business owners who act as informal advisers for each other. I have belonged to one of these groups led by another. Getting feedback and accountability from hard-headed biz owners each month is invaluable.

Even though I lead these groups for others, I need one for my own business just as much as anyone else.

Mastermind groups. Secondly, I have belonged to informal mastermind groups. Right now, five consultants and I have a “social media acceleration group” which meets virtually each month to help each other master various aspects of social media. We’ve helped each other with Twitter, Facebook, blogging, webinars, ebooks, video clips, etc. We stay focused on just these issues.

Accountability partners. I’ve had accountability buddies, where we help each other do something tough. Most recently, we’ve both been completing ebooks and getting them published. Knowing I’ve promised her to have the next section completed by Tuesday keeps me on it.

Writing coach. Finally, when I was writing a book, I hired a writing coach. She helped keep me on schedule, but also gave feedback on arrangement of material, etc.

Life coach. I’ve never had a life coach per se, because I’ve never had uncertainty about my life goals or how to pursue them. I have three lifetimes of things to do. My issue is getting things completed.

Why do I use coaches? I’m a collaborator, and collaboration is my catalyst to creativity. I work much more effectively by talking things out than by working away by myself all the time.

Don’t be the Lone Ranger. Small business owners get stuck in this trap of not having anybody to talk to about challenges in their business. If you work isolated, you make dumb and expensive mistakes.

July 24, 2012

Where to Get Help to Grow Your Business

Q. Who is the best choice to help you grow your business?

I used a business coach to help get my business off the ground. Now I want to grow my business. Who do you think is the best–my business coach, a CPA, a financial advisor, or a business attorney? Or someone else entirely? Asked by Jacquelyn Bell, CPA on “Small Business Owners Group” on LinkedIn.

A. My Answer

Rule #1. As your business grows, don’t be the Lone Ranger! Get some form of outside advice and support. Every exec of a larger company relies on this. Only small biz owners hold on to the mistaken idea that they can go it alone.

You offer several good suggestions, and here’s another: business owner round tables. My company leads ongoing peer advisory groups for owners of growing companies, and I know there are similar groups all over the country.

How the groups work. I’ll use my groups as a model so you can find or build a similar group: Ten owners meet once a month for half a day, under my guidance; members set goals, hold each other accountable, give feedback, and do problem solving.

Benefits. A group of savvy owners holds your feet to the fire the way no consultant can. “No way would I show up for the meeting without doing what I had committed to the group.” The breadth of experience is so great within a group of ten, it’s hard to find an issue that somebody hasn’t dealt with. You find great role models: “If she can do it, surely I can.” You discover that your worst problems are not unique; others have dealt with the same. You learn from others’ problems: “I was advising him, and I realized my finger should be pointing right at myself.”

Guidelines for a business owner round table:
Have a leader. All-volunteer mastermind groups are very tough to keep on track.
— Have people at similar levels of sophistication. I have groups for solopreneurs, and other groups for those with a management structure.
Diversity of business types is a major strength. I’ve led groups where they were all in the same industry, and they all thought the same–nobody to challenge them.
— It’s not a networking group. You don’t want your best customer in the room when you’re describing your toughest challenges. Of course, no competitors.
— Members must agree to be there, on time, till the end. Missing meetings hurts the rest of the group.
— Written agreement of confidentiality.
People need to pay–even if they miss a meeting. Otherwise they don’t respect the commitment.
The leader has to be strong enough to ride herd, yet not dominate the group. The members need to be the resource for each other.
— My groups have ranged between 5 and 10 members. More people and you don’t get heard.
These groups can be long-lasting. I have a number of 5 to 10 year members.

Such a group does not replace specialized professional advisers. You still have your CPA, CFO, attorney, marketing whiz, etc.

But a group of peers helps you with the subtle ways you need to change your management style so that you can keep up with your company’s growth.

Look here for more on how our groups are run.

“Round tables” don’t have to be round! Our groups meet in a board room with a long table, comfortable chairs, and a large coffee pot. And plenty of white boards to take notes on while members discuss their issues.

July 17, 2012

Hire a Small Consultancy?

Q: What are the top 3 things solo practitioners can do to out-compete the big brand consulting firms when vying for a project? Asked on Linked In by Roberta Guise

My answer:

The top 3 benefits to clients of working with smaller consultancies:
#1. You get to work directly with a principal of the firm, not with some green MBA sent out by the partners.
#2. Nimbleness and flexibility.
#3. The billing rate includes less markup to cover the cost of big offices and admin staff.

On the other hand, there are some (perceived) drawbacks:
#1. You’re stuck with one kind of expertise, and they try to make all your problems fit into what they know.
#2. If they’re busy, you wait. Your project may be subject to unexpected delays if multiple clients of theirs all have urgent requests.
#3. “What if the principal is hit by a bus?” You fear there’s nobody to step in to complete your project.

As the small consultant, how do you address these concerns with clients before they mention them? Here’s how I handle them:

1. Ally yourself with a few other complementary and trusted consultants, and don’t be afraid to refer business to them. You could also bring them into a project on a sub-contractor basis. These referrals have to flow both ways.

2. Under-promise, over-deliver. This is our time-management bugaboo. Don’t schedule all your hours; leave some time for urgent things that come up. The flip side of this concern is that we often handle urgent client requests during “overtime”—evenings and weekends.

3. Addressing this one requires having one or more strategic partners who can fill in for us, when we get sick, have an emergency, or just want to take a well-deserved vacation.

“Small” needn’t mean “solo.” The best consultancies I’ve had relied on two to four consultants who had partially overlapping areas of expertise. We were complementary. One client may use more than one of us. And we did have the capability to partially fill in for each other during absences.

Finding the right mix of people is not easy, but that’s a subject for another blog post.

January 9, 2012

Are There “Meaningless Innovations?”

My answer to LinkedIn question by Terrell L. McTyer

If you are a small player, say a consultant or other solopreneur, you’d better steer clear of “meaningless innovations,” because they could pull you under.

I’ve done a talk to consultants’ groups called “Innovate or Die,” where I stress how important it is to make sure that your efforts at innovation are well-targeted, and that you know how to market them once created. Not all of us can afford to bet the farm on a potential “disruptive innovation” that turns “meaningless” when nobody buys it.

TMcT: “But don’t you have to take risks to make it big?”

Yes, you have to take risks, but how big and with whose money? Entrepreneurs take PRUDENT risks. Two things:

— There’s a risk/reward calculation. The bigger the potential reward, the greater risk is justified. BUT it’s easy to fool yourself. “This is foolproof. We have no competitors.” I just lost $25k investing in one of these.

— OPM. This is why we have VCs and angels. They can afford to lose your investment. Of course, their price is high.

— There’s an absolute ceiling on risk you should take. Despite the image of the “all in” player, are you going to bet your own house? Your kids’ college funds?

Maybe you will. I know many who have. Some lost, and they started over. Or the wife went back to work. (Why is it that men are more likely to bet the farm than are women entrepreneurs?)

I guess the biggest error is not going for it due to fear of the above. You regret it forever.

The second biggest error is going for it, but NOT going in big and fast. Prudent, organic investment in innovation, then your better capitalized competitors whiz past you, leaving you stunted. This has happened to me.

November 10, 2010

Are we entering the Golden Age of Consulting? Yes or no.

Filed under: For Coaches & Consultants,Thrive in tough times — Tags: , , , — Mike Van Horn @ 12:57 am

I’m discussing this with another veteran consultant, Janet Tokerud, and also on a LinkedIn forum. I’d like to hear your 2 cents. Here are a few factors:


1. Companies can’t keep up with the firehose of change. Many have downsized their expertise, knowledge, and wisdom. They have to rely on outside consultants. We are the only ones with the mandate to stay on top of change, and the only ones who get paid enough to make this feasible.

2. We traffic in ideas and solutions and information. These are constructed of data and numbers and words. Thus the internet is the ideal medium for us. It connects us with each other anywhere in the world, as is happening on this forum this instant. We can communicate and publish with no middleman or gatekeeper. Internet forums like this provide the nexus for us to flourish and to provide value.


1. Economic volatility puts us at the end of the tiger’s tail, where we are thrashed back and forth unpredictably. For example, my clients are small professional businesses that serve larger corporations that engage in the global market. When the markets hiccup, the corporations shudder, my clients can have a heart attack, and I can get dashed on the rocks. Where is the stability for us to get ahead?

2. Every year, more and more lucrative consulting tasks are outsourced across the world or programmed into an app. What will be left for us to do?

3. We lack the resources to innovate to keep up with the big players. We’re doomed to fall behind and slide into irrelevance, to be overtaken by the next newly-minted generation of PhDs and quants.

What’s your take on the outlook for independent knowledge professionals such as consultants?

April 26, 2010

How Much to Pay Your Sub

Filed under: For Coaches & Consultants,Growth Management — Tags: , , — Mike Van Horn @ 5:28 pm
As a consultant or other professional, if you hire a skilled person to help you on a client project, how much should you pay them? How should you bill your client for their time on the project?  Here are my two rules:
— If the person is an employee of yours, bill them out at three times what you pay them. That is, if you pay them $30 per hour, you should bill them at $90. Looking at it the other way, if you can bill your client $90 for a skilled associate you assign to the project, you can pay that person no more than $30/hr.

— If they are a subcontractor, bill them at twice what you pay them. Thus if you can bill the client $90 for their billable time, you can pay your sub no more than $45.

Why must you have this much mark up? You are taking the entrepreneurial risk, doing the marketing, taking project responsibility, overseeing their work. You have to pay them whether or not you get paid. If there’s a glitch, you are responsible. If there’s a do-over or wasted time for which you cannot bill the client, you must still pay your associate. You’ve got to cover your overhead, contribute to your own salary, AND make a profit.

Why the difference between employee and sub? With an employee, you must cover payroll taxes, workers comp, etc. You may be paying them for hours that are not billable to any project.

You may respond, “I can bill my client at $120 per hour, but my sub wants $100. So I only make $20.” If you do this, you’re losing money every hour they work for you. You notice this via your feeling of  burnout: “I’m working my tail off on this project and I’m not making any money!” You’re tempted to do more of the billable work yourself–on evenings and weekends–rather than handing it off to your sub.

Instead, say, “I have this project ready to go. I need some help, and I can pay $60 per hour. Interested?” I’m betting you can find someone really qualified who will step up and shout “Yes!” Don’t let your overpriced sub call the shots. If you really need someone whose market rate (not their personal inflated rate) is $100/hr, then you must bill your client at $200.

If you don’t do this, I guarantee your business will stay in the cycle of smallness. Owners who adopt this pay policy free up their time to bring in new business, grow their business, hire and train more associates, and take more time off. Which do you want to be?

Do you have a situation where you can’t figure out how to make this work? Get back to me; give me some details. I can talk you through it.

December 31, 2009

Can Consultants Collaborate on Marketing and Projects?

From a discussion on Bay Area Consultants Network (LinkedIn) started by Herb Kessner: “How can our members with similar business models collaborate for success and revenue in 2010?”


I’m involved in such an effort with other consultants.

I would like to see efforts like this work, but I’ve found it difficult to produce the desired benefits. The idea is simple: We  have complementary offerings, thus:
1. We should be able to provide related services to a single client, when either of us alone could provide only part of what the client needs
2. We can take advantage of each other’s marketing networks. I refer qualified prospects to you, and you refer them to me.

But what happens is often different. I may be attracted to such a joint effort because my well is running dry, I’m trying to shortcut the tough necessity of marketing, and I’m hoping you will rescue me. Alas, you are hoping the same of me! So we’re two people (or more) whose pipelines are trickling.

Thus to work together effectively, the first question we must address is how we will tackle the annoying marketing question.

If our pipelines are flowing smoothly, and we’ve got as much work as we can handle, what’s our motivation for joining forces? Why go to the trouble of working out joint operating agreements with you when it just takes away from my billable hours? If I need somebody with your expertise on a project, why don’t I just hire you? Or sub part of it out to you?

This is a legitimate viewpoint, and a lot of consultants think this way. And this is why we remain solopreneurs. (Or, if we’re a very prolific rainmaker, we begin hiring others as subs or employees to handle projects we generate.)

But there is a case for a joint operating agreement among two or more consultants. The prime rationale, in my experience, is synergy and collaboration. We’ve got to energize each other, and make each other more creative and productive.

Several pre-requisites:

1. We must work with the same type of clients. Not just similar, but the same. I’m seeing this in a current effort: I work with slightly larger small businesses than does my collaborator, and it’s an issue.

2. We must offer truly complementary services to the same niche of customers. Not just non-competing services. Not just services the same client would purchase (e.g., my growth management services and your financial services). We must offer an integrated package that meets the felt needs of our target customers.

3. We must be able to develop brand new customers–and probably new channels to reach them. We can’t rely on our existing lists and means of outreach.

4. We must all be 100% committed to making this work–esp. the marketing, which is often the hardest part. Can it work as a sideline? A big question. How do we continue to handle our current business while developing this new joint venture?

Questions of success. When we do get joint clients:
— Who handles the admin stuff? Contracts. Billing. Banking. Insurance.
— Who owns the intellectual property? Not the “for hire” stuff that belongs to the clients, but the creative stuff that belongs to us. If I get inspired by your idea (and I will!), and develop a whole new thing from it, how do we divvy it up?
— What happens if you want to work, work, work, and I want to spend more time in Hawaii? Or if our joint venture has a big rush client, but I have to serve my own clients as well?

What do you think? I invite others to weigh in on this issue as well.

Mike Van Horn

September 24, 2009

When Do Companies Stop Being Creative?

(From my response on

A. As I look around at the small business owners I’ve worked with (including myself) here’s what I see:

1. Creativity comes in all kinds and sizes of business, and so does failure of creativity.

2. Failure of creativity follows shifts in the attitudes of the owner and other key people


• Owners get dragged out of creativity by the demands of running the business day to day. This has a lot to do with your own management style. “ I can’t find good people that I can trust.” “I got into this business to do what I love; now I spend all my time as a damn manager.” Thus you are continually pulled back down into lower-level tasks, and can’t focus on creativity, vision, strategy.

• Lack of support. Nobody is pushing you to take the creative leap, nor problem solving how to overcome the hurdles. No-one following behind, handling the details, executing the vision.

• Lack of systems; seat-of-pants management. Thus your “franticness quotient” increases exponentially with growth.

• Ill-fitting systems. E.g., accounting or project management or sales tracking systems that don’t give needed performance information to the owner.

• Constraining systems. Too much “by the book” or “bean counter mentality.” Of course the owner has put these into place, but then starts believing in them.

• Failure of vision. A creative owner gets beaten down, burned out. You have one good idea, but stick with it long after the window of opportunity has slammed shut. Or you fear taking the needed next step. “Tried that, got beaten down, it didn’t work, now I’m gun shy.”

• You get out of touch. You drift into an eddy out of the current of new ideas and technologies. This can be related to age, but there are many creative codgers out there.

• You get too comfortable. The balance between work and life tips toward Maui.

• Physical/mental impairment. Alas, this eventually catches up with us. If you’re smart, you’ll go out at the top, handing the creative reins over to the young whippersnapper you’ve groomed—and whose ideas you probably hate.

What’s the answer? First, see if you spot yourself in the above list, and own up to it. Then you can tackle the problem.
— My book can help you tackle this challenge: How to Grow Your Business without Driving Yourself Crazy.
— If you were a member of one of our business owner groups, this would be a perfect challenge to bring up to your group of peers. This is valuable because it’s often hard for us to see and acknowledge our part in this process.

— Call or email me. I’d be glad to talk with you a bit about this at no charge.

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